LONDON, Feb 6 (Reuters) - Plans by Zambia's new president to
reverse a hike in mining royalties may come too late to revive
investment in the sector, with confidence among foreign mining
companies shaken and neighbouring Democratic Republic of Congo
looking a potential better bet.

Eager to fill a hole in its finances, the government said
last year it would scrap a corporate income tax of 30 percent
while hiking mining royalties for companies operating in
Africa's second-largest producer of the metal.

That policy, developed under populist former President
Michael Sata, was inherited by newly-elected President Edgar
Lungu of Sata's Patriotic Front Party.

Lungu pledged to fight poverty and maintain the late Sata's
legacy but has since signaled an intention to scale back the
royalties, which came into effect in January, after mining
companies threatened to cut production and jobs in a sector that
is the life blood of the country.

The government is also ready to negotiate another sticking
point: the payment of $600 million in Value Added Tax (VAT)
refunds, which the industry says it is withholding.
Continued...